🍋 $300 Million Sneaker King Busted

Together With

Good Morning! Tyson Foods CFO was channeling his inner Beyond Meat COO and was arrested early Sunday after allegedly becoming intoxicated and falling asleep in the wrong house...

Today is Election Day and stocks usually rally after midterms, regardless of who wins. Tesla’s post-Twitter selloff sent the stock to a new 52-week low. Liverpool FC owners are considering selling the club and Lewis Hamilton received honorary Brazilian citizenship. After rug-pulling their investors, Peloton founders launched a new startup that will sell custom rugs, and also Adam Nuemann-ed their way into $25 million in Series A funding.

Want to quit your job but worried about your finances and don’t know where to start? ChroniFI helps you prepare for your next career without sacrificing your lifestyle along the way!

We are excited to announce a partnership with Jobbio, which will give you access to curated job opportunities. We will be featuring the top jobs in our newsletter every Tuesday and Thursday in Section 9 below. You can read more about our partnership here. If you'd like to post a job, reach out to us.

1. Story of the Day: $300 Million Sneaker King Busted

Seems like a lot of Americans are picking up side hustles as money gets tight. But few side-businesses have had as big of a rise and fall as Michael Malekzadeh's sneaker-flipping business. Michael made $300 million over the past few years, but his side-gig came to a screeching halt when he was charged with fraud last week.

Michael’s sneaker business took off during Covid. Many called him the ‘Sneaker King’ because he could sell shoes lower than retail prices before they even hit the market. Those who bought shoes from Michael could sell them later on, and some said flipping shoes beat their own S&P 500 returns.

The sneaker resale market is a lot like other aspects of the economy. Prices are driven by supply and demand, and many ‘limited edition’ items are scarce in nature. The investment bank Cowen thinks the resale market will reach $30 billion in 10 years. Michael was able to capitalize on consumer interest during the pandemic, but his customers sensed that something didn’t add up.

While Michael videotaped himself riding a $29,000 Louis Vuitton bike around his mansion, he was simultaneously scamming consumers out of $70 million worth of sneakers. He didn’t have the sneakers in stock and knew he’d only be able to fulfill 1-10% of orders, which is a big no-no.

Federal investigators charged Michael with running a Ponzi-like scheme, and some are calling him the Bernie Madoff of sneakers.

Takeaway: In times of economic turmoil, even trading sneakers can replace the stock market for some. Some buyers took advantage of supply and demand and invested in limited-edition shoes. Ironically, though, brokers like Michael developed their own style of security fraud. Alternative investments take all sorts of shapes and sizes in 2022, so just do your due diligence and be careful you’re getting what you signed up for.

2. Markets Rundown

If you want access to Wall Street insider interviews, industry deep-dives, and investment ideas, check out our Insiders newsletter.

Stocks closed higher ahead of a busy week with midterms and inflation data.

Movers & Shakers

• (+) Funko ($FNKO) +29% after dropping 60% last week.

• (+) Meta ($META) +7% after the company plans to reduce costs through layoffs.

• (–) Carvana ($CVNA) -16% because the used-car seller missed earnings.

Private Dealmaking

• Bakkt agrees to acquire Apex Crypto for up to $200 million

• Yassir, an Algerian super app, raised $150 million

• AMP Robotics, an AI robotic recycling company, raised $91 million

• Philip Morris will buy Swedish Match, a smokeless tobacco manufacturer, for $16 billion

• Walgreens-backed VillageMD will buy Summit Health for $9 billion

• Victoria’s Secret bought lingerie brand Adore Me for $400 million

Top Reads

• What we’ve learned about the health of consumers this quarter (CNBC)

• European venture capitalists are still confident (Axios)

• Bary Diller thinks Twitter is a toy for Elon Musk (CNBC)

• Wall Street struggles for direction as investors brace for midterms (Reuters)

• What the waves of tech layoffs tell us about the economy (CNN)

• The silver lining in Apple’s iPhone warning (YF)

• Here’s how much equity U.S. homeowners have lost since May (CNBC)

• Ten days of Twitter chaos (BBC)

• Inflation top election issue heading into midterms (Fox)

A Message from ChroniFI: See What Your Money Actually Means

Based on the job you do, it can be easy to think that money is really important. But what actually matters is your TIME.

If you use budgeting software or investment software, you’re off to a good start, but you’re leaving out the WHAT IT ALL MEANS part.

With ChroniFI, you can:

• Track how long until you can retire, or until you can take a pay cut to do work that actually means something to you

• See how long you can coast off of what you’ve already saved

• Dynamically track your expenses (including one-offs!) in a way that doesn’t blow up your charts

• See if that Nobu habit is delaying your retirement by 6 months

• Tease out which part of your progress is coming from your habits, and which part is from the markets

Better data means better decisions. Isn’t it time you applied the same rigor to your life as you do to your work? There’s a way to do it without spending Saturday morning in your spreadsheets.

Get started today and see when you can quit that job and go all in on your passion.

4. Book of the Day: Doughnut Economics

Economics is the mother tongue of public policy. It dominates our decision-making for the future, guides multi-billion-dollar investments, and shapes our responses to climate change, inequality, and other environmental and social challenges that define our times.

Pity then, or more like disaster, that its fundamental ideas are centuries out of date yet are still taught in college courses worldwide and still used to address critical issues in government and business alike.

That’s why it is time, says renegade economist Kate Raworth, to revise our economic thinking for the 21st century. In Doughnut Economics, she sets out seven key ways to fundamentally reframe our understanding of what economics is and does.

Along the way, she points out how we can break our addiction to growth; redesign money, finance, and business to be in service to people; and create economies that are regenerative and distributive by design.

Simple, playful, and eloquent, Doughnut Economics offers game-changing analysis and inspiration for a new generation of economic thinkers.

“Homo sapiens, it turns out, is the most cooperative species on the planet, outperforming ants, hyenas, and even the naked mole-rat when it comes to living alongside those who are beyond our next of kin.”

5. Short Squeez Picks

• Facebook is down more than 70% for the year, with investors questioning Mark Zuckerberg's metaverse bet. If you are interested in modeling out where Meta goes from here, Daloopa is giving away Meta's detailed financial model to Short Squeez readers.

• How entering flow state can trigger peak performance

• Beat the afternoon slump using the 80% rule

• How to read 12 books at once

• Warren Buffet on creating a brand

6. Daily Visual: It's Energy's Year

Source: Axios

7. Daily Acumen: When Things Fall Apart

“Things falling apart is a kind of testing and also a kind of healing. We think that the point is to pass the test or to overcome the problem, but the truth is that things don’t really get solved.

They come together and they fall apart. Then they come together again and fall apart again. It’s just like that.

The healing comes from letting there be room for all of this to happen: room for grief, for relief, for misery, for joy.

When we think that something is going to bring us pleasure, we don’t know what’s really going to happen.

When we think something is going to give us misery, we don’t know. Letting there be room for not knowing is the most important thing of all."

Source: When Things Fall Apart

8. Crypto Corner

• Looking at Bitcoin mining under the surface

• Musk sees a big role for crypto on Twitter

• Feds seize $3.36 billion in crypto dark web case

• What crypto traders expect from the midterms

• The crypto revolution’s turning point

9. Job Board

• Ripple - Director, Software Engineering (Trading Systems) - New York, NY

• Ramp Financial - Senior Data Scientist | Inference & Estimation - New York, NY

• Citi - Structurer / Funding and Liquidity - AVP - New York, NY

• Bloomberg - BVAL Corporate Bond Evaluator - New York, NY

• PayPal - Finance Transformation Manager - New York, NY

• MUFG - Investment Banking - Finance, Vice President (Hybrid/NY) - New York, NY - Hybrid Remote

• Amazon.com Services - Senior Investment Analyst, Trading & Investments - New York, NY

• Bloomberg - Senior Software Engineer - Trade Automation & Execution - New York, NY

• XR Trading - Trader - Remote

• Briefing.com - Stock Analyst & Trader - Remote US

• Citi - GSP XVA Trader- AVP - New York, NY

• Leidos - Treasury Manager - Capital Markets & Leasing - Reston, VA

10. Memes of the Day

 Advertise With Us / Wall Street Shop / Private Equity Course

*****